MARCH 2005

Subprime Lending Sets New Record in 2004

Subprime mortgage loan originations last year proved immune to the slump imposed on the conventional market by rising interest rates. Subprime originations soared by 59.6 percent in 2004 according to the trade publication Inside B&C Lending (Bethesda, MD) to reach $529.9 billion. In contrast, a decline in demand for refinancings caused total 1-4 family mortgage originations to fall by 25.3 percent. Consequently, the proportion of all mortgage originations in the United States that were subprime rose sharply to 18.9 percent. According to Inside B&C Lending, the top five subprime lenders, ranked by 2004 origination volume, were Ameriquest Mortgage ($83 billion in new loans), New Century Financial ($42 billion), Countrywide Financial ($39 billion), HSBC Consumer Finance ($33 billion), and Washington Mutual ($29.6 billion).